Each year millions of Medicare beneficiaries are discharged from acute care hospitals into post-acute care settings including inpatient rehabilitation facilities (IRFs) and skilled nursing facilities (SNFs). Medicare expenditures for post-acute care have more than doubled in the last decade, from $26.6 billion in 2001 to $63.5 in 2011. Several policy analysts are concerned that the rapid expansion in post-acute care costs has not translated into better outcomes. Some posit that the likely culprits for this problem are the way Medicare reimburses for health care and the resulting fragmented nature of health care delivery. Under current Medicare payment policy acute care hospitals, SNFs, and IRFs each receive a separate payment for providing acute and post-acute care to patients. More importantly, currently Medicare does not reimburse any entity for coordinating patient transitions across providers. In response to these concerns the Affordable Care Act included several Medicare reforms such as penalties for readmissions, Accountable Care Organizations, and Bundled Payment to improve care coordination, particularly following hospital discharge. Under each of these reforms, health care providers bear the financial risk of poor patient outcomes stemming from poor coordination or under-provision of care. These Medicare reforms have provided an impetus to providers and even private health plans to implement changes aimed towards improving care coordination. It is likely that hospitals will attempt to improve coordination and efficiency after payment reform by establishing closer relationships with other health care providers. As the administrative burden from increased coordination and monitoring of patients across sites is likely to be considerable, many researchers have posited that such reforms are likely to lead to an increase in the market share of vertically integrated or hospital based IRFs or SNFs - where patients receive acute and post-acute care within the same facility. However, there is little evidence on the causal effect of receiving vertically integrated care (that is, receiving post-acute care within the same facility that provided acute care) on patient outcomes and health care costs. Moreover, the effects of receiving vertically integrated care are likely to evolve over time as providers face increasing financial pressure from Medicare and private health plans to coordinate care. The specific aims of this project are to advance knowledge on the potential effects of receiving vertically integrated care. In particular, we propose to: 1. Estimate the causal effect of receiving vertically integrated care for patients admitted to SNFs on patient outcomes and health care costs 2. Estimate the causal effect of receiving vertically integrated care for patients admitted to IRFs on patient outcomes and health care costs 3. Estimate the extent to which the causal effects of receiving vertically integrated care evolve overtime as efforts to coordinate care gain momentum 4. Examine trends in vertical integration of care and use results from Aims 1 to 3 to examine the contribution of these trends to aggregate trends in patient outcomes and health care costs The proposed project will use linked Medicare data from 2003-2015 and will focus on three tracer conditions: stroke, hip fracture, and lower extremity joint replacement. The results will provide important evidence on the potential effects of vertical integration and proposed Medicare reforms aimed at improving care coordination.